Hiring overseas contractors — do I need to withhold taxes or file anything?

US C-corp hiring developers in Poland and Philippines as contractors. Do I need to withhold taxes? File 1099s? What paperwork is required on my end?

For foreign contractors (non-US persons, working outside the US):

No 1099 required: 1099-NEC is only for US persons or services performed in the US.

No withholding required: 30% withholding only applies to US-source income. Services performed entirely outside US = foreign-source income = no withholding.

What you DO need: Collect W-8BEN from each contractor. This documents they're foreign and not subject to US tax withholding. Keep on file for at least 4 years.

Important: If they ever work in the US (even briefly), the analysis changes.

Practical setup: Use Deel, Remote, or Oyster for international contractors. They handle contracts, payments, compliance for ~$30-50/contractor/month. Worth it to avoid the headaches.

Also get a proper contractor agreement with IP assignment, confidentiality, and independent contractor language. Misclassification risk exists in their countries too.

One thing to watch: "permanent establishment" risk. If your contractors in Poland start looking like a Polish branch (dedicated office, signing contracts, etc.), Poland may claim your company has tax nexus there.

For individual contractors working remotely: usually fine. For a team of 10+ in one country acting like an office: talk to an international tax advisor.